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If the functional currency is the local currency of a foreign subsidiary, what exchange rates should be used to translate the items below, assuming the foreign subsidiary is in a country which has not experienced hyperinflation over three years? Inventories Equipment Current Rate Historical Rate Current Rate Historical Rate A) B) C) D) Current Rate Current Rate Depreciation Expense-Equipment Average Rate Historical Rate Historical Rate Average Rate Average Rate Multiple Choice O Option D O Option o Option A Historical Rate Current Rate Historical Rate C) D) 1 Current Rate Current Rate Average Rate Historical Rate Historical Rate Average Rate Multiple Choice Option A On January 2, 20X8, Polaris Company acquired a 100% interest in the capital stock of Ski Company for $3,100,000. Any excess cost over book value is attributable to a patent with a 10-year remaining life. At the date of acquisition, Ski's balance sheet contained the following information: Cash net Receivables (net) Inventories (FIPO) Plant and Equipment (net) Total Accounts Payable Capital Stock Retained Earnings Total Foreign Currency Units (FCU) 40,000 150,000 500,000 1,500,000 2,190,000 200,000 600,000 -1,390,000 2,190,000 Ski's income statement for 20X8 is as follows: Revenues from Sales Cost of Goods Sold Gross Margin Operating Expenses (exclusive of depreciation) Depreciation Expense Income Taxes Foreign currency Units (PCU) 1,010,000 (590,000) 420,000 (120,000) (200,000) (40,000) Revenues from Sales Cost of Goods Sold Gross Margin Operating Expenses' (exclusive of depreciation) Depreciation Expense Income Taxes Net Income Foreign Currency Units (FCU) 1,010,000 (590,000) 420,000 (120,000) (200,000) (40,000) 60,000 The balance sheet of Ski at December 31, 20X8, is as follows: Cash Receivables (net) Inventories (FIFO) Plant and Equipment (net) Total Accounts Payable Capital Stock Retained Earnings Total Foreign Currency Units (FCU) 180,000 210,000 520,000 1,300,000 2,210,000 180,000 600,000 1,430,000 2,210,000 Ski declared and paid a dividend of 20,000 FCU on October 1, 20X8. Spot rates at various dates for 20X8 follow: Ski declared and paid a dividend of 20,000 FCU on October 1, 20X8. Spot rates at various dates for 20x8 follow. January 2 October 1 December 31 Weighted Average 1 TCU 1 TCU 1 TCU 1 TCU $ $ $ $ 1.50 1.60 1.70 1.55 Assume Ski's revenues, purchases, operating expenses, depreciation expense, and income taxes were incurred evenly throughout 20x8 Refer to the above information. Assuming the U.S. dollar is the functional currency, what is Polaris's remeasurement gain (loss) for 20X8? (Assume the ending Inventory was acquired on December 31, 20X8.) Multiple Choice O $22.000 gan O $31000 gain INICI W OUVRHU LIICILV. VIOLIS VIGNISICHICOSUICICI Required information Multiple Choice $22,000 gain $31000 gain $36,500 Ioss $32,000 goin If the functional currency is the local currency of a foreign subsidiary, what exchange rates should be used to translate the items below, assuming the foreign subsidiary is in a country which has not experienced hyperinflation over three years? Inventories Equipment Current Rate Historical Rate Current Rate Historical Rate A) B) C) D) Current Rate Current Rate Depreciation Expense-Equipment Average Rate Historical Rate Historical Rate Average Rate Average Rate Multiple Choice O Option D O Option o Option A Historical Rate Current Rate Historical Rate C) D) 1 Current Rate Current Rate Average Rate Historical Rate Historical Rate Average Rate Multiple Choice Option A On January 2, 20X8, Polaris Company acquired a 100% interest in the capital stock of Ski Company for $3,100,000. Any excess cost over book value is attributable to a patent with a 10-year remaining life. At the date of acquisition, Ski's balance sheet contained the following information: Cash net Receivables (net) Inventories (FIPO) Plant and Equipment (net) Total Accounts Payable Capital Stock Retained Earnings Total Foreign Currency Units (FCU) 40,000 150,000 500,000 1,500,000 2,190,000 200,000 600,000 -1,390,000 2,190,000 Ski's income statement for 20X8 is as follows: Revenues from Sales Cost of Goods Sold Gross Margin Operating Expenses (exclusive of depreciation) Depreciation Expense Income Taxes Foreign currency Units (PCU) 1,010,000 (590,000) 420,000 (120,000) (200,000) (40,000) Revenues from Sales Cost of Goods Sold Gross Margin Operating Expenses' (exclusive of depreciation) Depreciation Expense Income Taxes Net Income Foreign Currency Units (FCU) 1,010,000 (590,000) 420,000 (120,000) (200,000) (40,000) 60,000 The balance sheet of Ski at December 31, 20X8, is as follows: Cash Receivables (net) Inventories (FIFO) Plant and Equipment (net) Total Accounts Payable Capital Stock Retained Earnings Total Foreign Currency Units (FCU) 180,000 210,000 520,000 1,300,000 2,210,000 180,000 600,000 1,430,000 2,210,000 Ski declared and paid a dividend of 20,000 FCU on October 1, 20X8. Spot rates at various dates for 20X8 follow: Ski declared and paid a dividend of 20,000 FCU on October 1, 20X8. Spot rates at various dates for 20x8 follow. January 2 October 1 December 31 Weighted Average 1 TCU 1 TCU 1 TCU 1 TCU $ $ $ $ 1.50 1.60 1.70 1.55 Assume Ski's revenues, purchases, operating expenses, depreciation expense, and income taxes were incurred evenly throughout 20x8 Refer to the above information. Assuming the U.S. dollar is the functional currency, what is Polaris's remeasurement gain (loss) for 20X8? (Assume the ending Inventory was acquired on December 31, 20X8.) Multiple Choice O $22.000 gan O $31000 gain INICI W OUVRHU LIICILV. VIOLIS VIGNISICHICOSUICICI Required information Multiple Choice $22,000 gain $31000 gain $36,500 Ioss $32,000 goin